Here’s an in-depth look at the specific problems you could face:

1. Inability to File Income Tax Returns (ITR): Filing your ITR requires an active PAN. If your PAN becomes inoperative, you won’t be able to file your returns for the current or future assessment years. This non-compliance could lead to penalties and other legal issues.
2. Tax Refunds Will Not Be Processed: If you’ve already filed your ITR but your PAN becomes inoperative before the refund is processed, you will not receive the refund. Additionally, the government is unlikely to pay interest on any delayed refund due to your non-compliance.
3. Higher TDS and TCS Rates Will Apply: According to Section 206AA (TDS) and Section 206CC (TCS) of the Income Tax Act, any transaction that involves an invalid or inoperative PAN will attract higher deduction or collection rates, often double the normal rate. This means more money will be deducted from your income or transactions upfront.
4. Inability to Open New Bank or Demat Accounts
   Most financial institutions require a PAN for opening new bank accounts, demat accounts, and fixed deposits. If your PAN is inactive, you won’t be allowed to open any of these, cutting off your access to vital financial services.
5. KYC Verification Will Fail: PAN is a key document for Know Your Customer (KYC) compliance. A deactivated PAN will automatically lead to KYC failure, which can result in freezing of accounts or denial of services from banks, mutual funds, brokers, and digital wallet companies.
6. Limitations on High-Value Transactions: You won’t be able to conduct cash transactions over ₹50,000 or carry out foreign currency exchanges above that amount. This can impact your travel plans, business expenses, or emergency cash needs.
7. Inability to Buy or Sell Property and Vehicles: Buying or selling immovable property and high-value items like vehicles requires a PAN for legal and financial documentation. Without an active PAN, these transactions will be considered invalid and may even be reversed or penalized.
8. Suspension of Ongoing Investments and Trading Activities: If your PAN is deactivated, you may be barred from executing buy or sell orders in the stock market. Mutual fund SIPs, redemptions, and portfolio updates may also be halted due to invalid KYC.
9. Loan and Credit Facility Rejections: Banks and NBFCs won’t process applications for home loans, personal loans, education loans, or credit cards without a valid PAN. This can be a major setback if you’re depending on financing for personal or business needs.
10. Ineligibility to Submit Forms 15G and 15H: These forms allow individuals to avoid TDS if their income is below the taxable limit. If your PAN is inoperative, these forms will not be accepted, and TDS will be deducted at a higher rate regardless of your income level.
11. Disruption of Business Operations: Businesses are required to have a PAN for GST registration, invoice generation, bank transactions, and compliance filings. If your PAN becomes inactive, your business operations may be disrupted, leading to penalties and potential legal issues.
12. Freezing of Existing Accounts and Portfolios: Even your current bank accounts, trading accounts, and mutual fund portfolios may be frozen or restricted, as institutions routinely validate PAN as part of KYC. This means you might not be able to access your own money or investments.

How To Link PAN with Aadhaar

Linking your PAN with Aadhaar is mandatory to keep your PAN active and avoid penalties or blocked financial services. Fortunately, the Income Tax Department has made the process simple and entirely online.

Here is a step-by-step guide to help you link your PAN with Aadhaar:

• Step 1: Visit the Income Tax e-Filing Portal
  Go to the official website: https://www.incometax.gov.in
• Step 2: Click on ‘Link Aadhaar’
  On the homepage, locate the ‘Link Aadhaar’ option under the Quick Links section and click it.
• Step 3: Enter PAN and Aadhaar Numbers
  Input your 10-digit PAN and 12-digit Aadhaar number correctly in the respective fields.
• Step 4: Click on ‘Continue to Pay Through e-Pay Tax’
  You will be directed to make the required payment (₹1,000 if applicable). This is a necessary step before linking.
• Step 5: Enter Payment Details
  Provide your PAN again, enter a valid mobile number to receive OTP, and verify it. Then proceed to payment.
• Step 6: Choose Assessment Year and Payment Type
  Select the relevant Assessment Year and the Type of Payment as Other Receipts (Minor Head 500). The fee amount will be auto-filled.
• Step 7: Complete the Payment
  Choose your payment method (Net Banking, UPI, debit card, etc.), and complete the transaction on your bank’s site.
• Step 8: Wait for 4–5 Working Days
  Allow time for your payment to be verified by the system.
• Step 9: Submit Aadhaar Link Request
  Return to the ‘Link Aadhaar’ page. After successful payment verification, fill in your PAN, Aadhaar number, name (as per Aadhaar), and click ‘Link Aadhaar’.
• Step 10: Validate with OTP
  You will receive a 6-digit OTP on your mobile. Enter it and click Validate to complete the process.

Confirmation: A message will appear confirming the successful submission of your PAN-Aadhaar linking request.

Also Read: Aadhaar Mandatory for PAN Card

How to Check if PAN is Linked to Aadhaar

It’s essential to confirm whether your PAN is already linked to your Aadhaar, especially if you’ve recently submitted a linking request or paid the applicable fee. The Income Tax Department provides a quick and convenient way to verify your PAN-Aadhaar link status without logging into the portal.

• Here’s how you can check the status:
  Step 1: Visit the Income Tax e-Filing Portal
  Go to the official website at https://www.incometax.gov.in
• Step 2: Click on ‘Link Aadhaar Status’
  On the homepage, under the ‘Quick Links’ section, click on the option labeled ‘Link Aadhaar Status’.
• Step 3: Enter Your Details
  On the next screen, input your 10-digit PAN and 12-digit Aadhaar number correctly in the respective fields.
• Step 4: Click on ‘View Link Aadhaar Status’
  Once your details are filled in, click the button to view your status.
• Step 5: Read the Status Message
  You will receive a message displaying one of the following:
  “Your PAN is already linked to Aadhaar.”
  “Your Aadhaar-PAN linking request is pending with UIDAI for validation.”
  “Your PAN is not linked with Aadhaar.”
  If your PAN is not linked or is still pending, it is advised to complete the process immediately to avoid future financial or legal complications.
  

Suggested Read: PAN Aadhaar Linking Deadline 2025

What to do if PAN is Already Inactive

If your PAN has been marked as inoperative, there’s no need to worry. You can reactivate it by paying the penalty and completing the linking process. Follow these steps:

1. Visit the Income Tax Portal.
2. Pay the ₹1,000 penalty through e-Pay Tax under Minor Head 500.
3. Complete the PAN–Aadhaar linking online.

It may take up to 30 days for your PAN to become operative again.

Once the payment and linking request are processed, your PAN status will be updated to “operative”. Until then, avoid initiating any high-value financial transactions, as your inoperative PAN will not be accepted for verification or compliance.

Conclusion

The clock is ticking. If you fall under the category of individuals who got their PAN using an Aadhaar Enrolment ID before October 1, 2024, then December 31, 2025, is your final chance to secure your PAN’s validity.

This isn’t just about compliance; it’s about your entire financial future. From banking and taxes to loans and investments, every aspect of your economic life hinges on a valid PAN. Don’t wait for the last minute. Take action now to avoid disruption, delays, and distress. Log in, link up, and lock down your financial identity today.